The Single Reason This "Recovery" Isn't Like Any Other
If you've been reading for awhile, we've been very bullish on the whole idea of the ongoing "balance sheet recession" characterized by the ongoing need of households to deleverage.
To put it another way: Households are saddled with so much debt from the boom, that even with all the wrenching pain of the bust, they still have a lot of debt to cut.
For proof that this is the deciding factor behind the boom, consider this chart from the Council on Foreign Relations (.pdf).
In past recessions, debt intake never bothered to slowdown. Even in the worst ones, leveraging up continued.
Now? flat. And perhaps worrisome is that it hasn't gone down more, since that just means the pain drags out longer.
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Debt grows exponentially, while the real economy only grows linearly. In a debt-based monetary system such as the one we have (which should properly be called Creditism not Capitalism), where every dollar in circulation came about as the result of the creation of debt, at some point, there is simply no more ability for the real economy to take on any more debt usefully. This point was probably reached some years ago. Then, at some further point, we reach a place where the real economy cannot take on any more debt at all, useful or not. We may have now reached this point.
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